The SA mobile market today “A new chapter in the growth story” Robert Pasley Director Corporate Strategy Vodacom Group (Pty) Ltd

A new chapter of growth 1. Review of the mobile market today 2. Recent new trends in growth 3. Future subscriber growth in South Africa 4. Key drivers of growth

Future plans, strategies and views of the future from the operators pending liberalisation and open competition Mobile market ‘liberalised’ in 1994 Competition from the launch of the networks Additional competition from November 2001 No further liberalisation pending

A new chapter of growth 1. Review of the mobile market today 2. Recent new trends in growth 3. Future subscriber growth in South Africa 4. Key drivers of growth

Setting the stage 3 national operators Competition fuelling growth 12 million subscribers 28% penetration of total population Maturing market - highly sophisticated Recognisable leading consumer brands - innovation and leading products

A new chapter of growth 1. Review of the mobile market today 2. Recent new trends in growth 3. Future subscriber growth in South Africa 4. Key drivers of growth

Recent trends - a new chapter of growth Stabilising ARPUS Increasing levels of usage (MoU) - key tariff segments User acceptance of data - SMS providing the stimulus Alternative avenues for revenue growth - holds promise Continued fixed line substitution Mobile data applications - GPRS platform Access share of corporate ICT spend The mobile office - SOHO and SMME

A new chapter of growth 1. Review of the mobile market today 2. Recent new trends in growth 3. Future subscriber growth in South Africa 4. Key drivers of growth

The importance of subscriber numbers Access Universal and affordable provision Wide range of services for economic growth Progress towards universal provision Economic growth Industry growth

SA subscriber forecasts to 2008 Vodacom’s SA Mobile forecast, incl. AIDS effect 2008: 19 million 2 4 6 8 10 12 14 16 18 20 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Actual Vodacom MTN Analyst Actual: September 02: 12 million Analyst 2008: 16,8million MTN’s 2008: 14,5 million Actual: March 02: 10.8 million

Vodacom’s subscriber forecasts models Driven by affordability studies Not only conventional LSM analysis Across individual income segments Determines penetration levels / income segments Benchmarked against other market’s penetration levels: GDP / capita and Gini coefficients adjustments Relatively accurate

19 million subscribers by 2008 SA Subscriber saturation expected at around 19m Subs in March 2008 Penetration = 39,2% of total SA population. SA CELLULAR PENETRATION / INCOME GROUP Reported Base 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 R1-R499 R500-R599 R600-R999 R1000-R1399 R1400-R1999 R2000-R2999 R3000-R4999 R5000-R7999 R8000-R11999 R12000-R19999 R20000+ Unemployed Housewives Students Rich Kids 10 -16 yrs Percentage penetration Graph meant to be overwhelming to prove detailed analysis behind subscriber forecast of previous slide Base case assumptions: Total population growing at 2.15% to around 50 million, 16+ = 32 million (No major impact from AIDS) We assume sustainable GDP growth of around 3% and successful redistribution programs will support a higher population growth rate in lower LSM groups and a large youth base will enter the work-force. Assumption is that housewives, students, 10 to 16 year-olds and retired people of the R2000 + population will be cross-subsidised The current penetration of 66.4% for First World component (taken as people earning more than R3000) compares well with the average penetration of 68% in Europe The maximum penetration rate in 2007 is assumed to be 80% for all income groups over R1000, 28 % of unemployed (including a component of the informal sector) and 24% of people earning less than R500.

Stabilising voice ARPUs 358 394 182 208 266 179 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 1998 1999 2000 2001 2002 Sept 50 100 150 200 250 300 350 400 Subscribers ARPU

Increasing MoU across key tariff packages 40 90 140 190 240 290 340 390 440 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 AMOU Contract Prepaid Total Aug-02 Sep-02

A new chapter of growth 1. Review of the mobile market today 2. Recent new trends in growth 3. Future subscriber growth in South Africa 4. Key drivers of growth

SMS activity - a taste of things to come 25 50 75 100 125 150 175 200 225 250 275 300 Million SMS's per Month Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Jul-02 In excess of 300% increase since end 2000

Technology overview - ready for launch GSM Technology Mature and Reliable Low cost operation MMS messaging set to take off by 2003 Satisfy both: Consumer Services & Entertainment demand Corporate Services and Niche markets

A new chapter of growth Conclusion Subscriber growth at stable ARPU “Democratise Telecommunications” New opportunities for growth: SMS MMS Entertainment / Information services Corporate data services

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